Trump Administration Resets Policy Toward China in Landmark Speech

Vice President Mike Pence’s unprecedented speech on China-U.S. relations last week is still causing shockwaves due to its unflinching directness in calling out China on its litany of transgressions, denouncing Beijing’s “whole-of-government” approach in undermining and sabotaging the United States.

The speech confronted the Chinese Communist Party’s efforts to interfere in U.S. politics, domestic and foreign policy, and academia, among many other areas.

Pence pulled no punches in his speech, which he said is an official resetting of U.S.–China policy. He outlined in detail the intensive and sophisticated influence operations of the Party in the United States.

“As we speak, Beijing is employing a whole-of-government approach, using political, economic, and military tools, as well as propaganda, to advance its influence and benefit its interests in the United States,” he said at the Hudson Institute in Washington on Oct. 4.

“China is also applying this power in more proactive ways than ever before, to exert influence and interfere in the domestic policy and politics of this country.”

Pence said the United States once hoped that “economic liberalization would bring China into greater partnership with us and with the world.”

“After the fall of the Soviet Union, we assumed that a free China was inevitable,” he said. “Heady with optimism, at the turn of the 21st century America agreed to give Beijing open access to our economy and bring China into the World Trade Organization.”

He noted that much of China’s GDP growth in the past 17 years—making it the second-largest economy in the world—was driven by American investment. He then listed numerous ways where Beijing hasn’t played fair when it comes to trade.

“The Chinese Communist Party has also used an arsenal of policies inconsistent with free and fair trade, including tariffs, quotas, currency manipulation, forced technology transfer, intellectual property theft, and industrial subsidies that are handed out like candy to foreign investment. These policies have built Beijing’s manufacturing base, at the expense of its competitors—especially the United States of America,” he said.

Pence said that in order to achieve its “Made in China 2025” plan, which would see Beijing taking control of 90 percent of the world’s most advanced industries, “Beijing has directed its bureaucrats and businesses to obtain American intellectual property—the foundation of our economic leadership—by any means necessary.”

Pence highlighted religious freedom in his speech and expressed his deep concerns over the Chinese Communist Party’s crackdowns on Chinese Christians, Buddhists, and Muslims. “A country that oppresses its own people rarely stops there,” he said.

He also sharply criticized Beijing’s coercive behaviour against Taiwan—including convincing three Latin American nations to sever ties with Taipei and recognize Beijing—and also forcing U.S. companies to change how they depict Taiwan.

“While our administration will continue to respect the One China Policy, as reflected in the three joint communiques and the Taiwan Relations Act, America will always believe Taiwan’s embrace of democracy shows a better path for all the Chinese people,” he said.

New Approach to China

Pence said previous U.S. administrations all but ignored China’s actions—and in many cases actually abetted them. “But those days are over,” he said, and the Trump administration is adopting a new approach.

“We seek a relationship grounded in fairness, reciprocity, and respect for sovereignty, and we have taken strong and swift action to achieve that goal.”

Washington’s new approach, Pence said, includes making the U.S. military stronger, implementing tariffs specifically targeting the advanced industries that Beijing is trying to capture and control, giving a stronger commitment to a free and open Indo-Pacific, forging new trade deals, streamlining international development and finance programs, and giving foreign nations a just and transparent alternative to China’s debt-trap diplomacy.

He said he would travel to Singapore and Papua New Guinea next month to represent the United States at ASEAN and APEC, and would unveil new measures and programs to support a free and open Indo-Pacific on behalf of President Donald Trump.

One of those programs is the BUILD Act, which will Trump will soon sign into law. The act provides the means for private enterprise to contribute to the development of low- and lower-middle-income countries. That’s partially in response to China’s One Belt One Road initiative, which has given the Beijing regime influence in the Pacific, South Asia, and Africa.

‘A Trade Coalition of the Willing’

On Oct. 5, U.S. Commerce Secretary Wilbur Ross signalled that Washington may use a provision in the new trade agreement with Canada and Mexico to put pressure on China to end its bad practices.

White House National Economic Council Director Larry Kudlow holds a news briefing at the White House in Washington, on June 6, 2018. (Chip Somodevilla/Getty Images)

The provision in the recently completed USMCA specifies that if one of the three partners enters a free-trade deal with a “non-market” country—the implication being China—it must notify the other two, which may then quit the agreement and form their own trade deal together.

Ross said the provision is “a kind of poison pill” that could be replicated in U.S. trade deals with other countries.

“People can come to understand that this is one of your prerequisites to make a deal,” he told Reuters in an interview.

Washington is currently in talks with Japan and the European Union to find ways to reduce large U.S. trade deficits in certain areas.

On the same day as Pence’s speech, Larry Kudlow, director of the White House National Economic Council, said at the Economic Club of Washington that “China has played fast and loose with the rules” and Trump is trying to level the playing field.

“We are talking to the EU again, we are talking to Japan again, we are moving to what I have characterized as a trade coalition of the willing to confront China,” Kudlow said, according to C-SPAN2.

“The president wants a level playing field, he wants reciprocity. Ultimately, he wants zero tariffs, zero non-tariff barriers, and zero subsidies. This may be painful in some cases. He’s a disrupter, as we know. But again, using [USMCA] as a good win, and we had South Korea, I think these things can be negotiated.”

Kudlow noted that past presidents of both parties paid “lip service” to changing trade practices with China but never followed through.